##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008 
or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 001-00091
 Furniture Brands International, Inc.
  Delaware
    
    43-0337683(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)1 North Brentwood Blvd., St. Louis, Missouri
    
    63105(Address of principal executive offices)
    
    (Zip Code)
 (314) 863-1100
  Title of each class
    
    Name of each exchange on which registeredCommon Stock  $1.00 Stated Value
    
    New York Stock Exchangewith Preferred Stock Purchase Rights
  (Title of Class)
 þ Yes o No
 o Yes þ No
 þ o
 o
  Large Accelerated Filer þ
    
    Accelerated Filer o

    Non-Accelerated Filer o
(Do not check if a smaller reporting company)
    Smaller reporting company o
 o þ




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##### 



FURNITURE BRANDS INTERNATIONAL
 TABLE OF CONTENTS
 PagePART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    10Item 1B. Unresolved Staff Comments
    
    
    15Item 2. Properties
    
    
    15Item 3. Legal Proceedings
    
    
    16Item 4. Submission of Matters to a Vote of Security Holders
    
    
    16PART IIItem 5. Market For Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    16Item 6. Selected Financial Data
    
    
    18Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    29Item 8. Financial Statements and Supplementary Data
    
    
    30Item 9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure
    
    
    58Item 9A. Controls and Procedures
    
    
    58Item 9B. Other Information
    
    
    59PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    60Item 11. Executive Compensation
    
    
    60Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters
    
    
    60Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    61Item 14. Principal Accountant Fees and Services
    
    
    61PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    62Exhibit 10.23Exhibit 10.27Exhibit 21.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
    2




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PART I
 
 Item 1. Business
    BRANDS AND PRODUCTS
  
    
    Broyhill has collections of mid-priced furniture, including both wood furniture and
upholstered products, in a wide range of styles and product categories including bedroom,
dining room, living room, occasional, youth, home office, and home entertainment.
 
    
    Lane focuses primarily on mid-priced upholstered furniture, including motion and
stationary furniture with an emphasis on home entertainment and family rooms.
 
    
    Thomasville has both wood furniture and upholstered products in the mid- to upper-price
ranges and also manufactures and markets promotional-priced case goods and
ready-to-assemble furniture.
 
    
    Drexel Heritage markets both case goods and upholstered furniture under the brand names
Heritage, Drexel, and dh, in categories ranging from mid- to premium-priced.
 
    
    Henredon specializes in both wood furniture and upholstered products in the
premium-price category.
 
    
    Hickory Chair manufactures a premium-priced brand of wood and upholstered furniture,
offering traditional and modern styles.
 
    
    Pearson offers contemporary and traditional styles of finely tailored upholstered
furniture in the premium-price category.
 
    
    Laneventure markets a premium-priced outdoor line of wicker, rattan, bamboo, exposed
aluminum, and teak furniture.
 
    
    Maitland-Smith designs and manufactures premium hand crafted, antique-inspired
furniture, accessories, and lighting, utilizing a wide range of unique materials.
Maitland-Smith markets under both the Maitland-Smith and LaBarge brand names.
   3




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DISTRIBUTION
         4




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Thomasville Stores (a)
    
    
    All Other Retail (b)Year Ended December 31,
    
    
    Year Ended December 31,(Dollars in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Net sales
    
    $
    61,319
    
    
    $
    29,585
    
    
    $
    73,778
    
    
    $
    97,799Cost of sales
    
    
    38,590
    
    
    
    21,304
    
    
    
    46,932
    
    
    
    61,949Gross profit
    
    
    22,729
    
    
    
    8,281
    
    
    
    26,846
    
    
    
    35,850Selling, general, and administrative
expenses
    
    
    36,912
    
    
    
    15,218
    
    
    
    80,254
    
    
    
    69,024Operating loss
    
    $
    (14,183
    )
    
    $
    (6,937
    )
    
    $
    (53,408
    )
    
    $
    (33,174
    )Number of stores at end of year
    
    
    44
    
    
    
    12
    
    
    
    (b
    )
    
    
    (b
    )Same-store-sales(c):Annual percentage increase/(decrease)
    
    
    (4.53
    )%
    
    
    (d
    )
    
    
    (d
    )
    
    
    (d
    )Number of stores in same-store-sales
    
    
    12
 a)
    
    This supplemental data includes only open Thomasville retail store locations.b)
    
    This supplemental data includes the retail stores for our other brands. As of December
31, 2008, we had sixteen company-owned retail stores other than Thomasville consisting of
one Broyhill store, four Lane stores, ten Drexel Heritage stores, and one Henredon store.
This data also includes costs associated with closed retail locations including occupancy
costs, lease terminations costs, and costs associated with lease liability of $39.9 million
and $14.9 million in 2008 and 2007, respectively.c)
    
    Same-store-sales percentage is based on sales from stores that have been in operation
and company-owned for at least 15 months.d)
    
    Not meaningful due to the small number of stores in the same-store calculation.  MANUFACTURING AND SOURCING
    5




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RAW MATERIALS AND SUPPLIERS
    MARKETING AND ADVERTISING
  MANAGEMENT AND EMPLOYEES
  ENVIRONMENTAL MATTERS
   6




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COMPETITION
  BACKLOG
  TRADEMARKS AND TRADE NAMES
   WORKING CAPITAL
  INTERNET ACCESS
   7




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EXECUTIVE OFFICERS
 Name
    
    Age
    
    Position HeldRalph P. Scozzafava
    
    
    50
    
    
    Chairman of the Board and Chief Executive OfficerSteven G. Rolls
    
    
    54
    
    
    Senior Vice President and Chief Financial OfficerMary E. Sweetman
    
    
    45
    
    
    Senior Vice President, Human ResourcesJon D. Botsford
    
    
    54
    
    
    Senior Vice President, General Counsel and Corporate SecretaryRaymond J. Johnson
    
    
    53
    
    
    Senior Vice President, Global Supply ChainRichard R. Isaak
    
    
    41
    
    
    Controller and Chief Accounting OfficerJeffrey L. Cook
    
    
    53
    
    
    President-Broyhill Furniture Industries, Inc.William G. Holliman
    
    
    43
    
    
    President-Lane Furniture Industries, Inc.Edward D. Teplitz
    
    
    47
    
    
    President-Thomasville Furniture Industries, Inc.Daniel R. Bradley
    
    
    52
    
    
    President-Furniture Brands Designer Group
 Ralph P. Scozzafava
 Steven G. Rolls
 Mary E. Sweetman
 Jon D. Botsford
 Raymond J. Johnson
  8




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Richard R. Isaak
 Jeffrey L. Cook   William G. Holliman
 Edward D. Teplitz
 Daniel R. Bradley
   9




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Item 1A. Risk Factors
 The risks and uncertainties described below are those that we currently believe may materially
affect our company. Additional risks and uncertainties that we are unaware of or that we currently
deem immaterial also may become important factors that affect our company. You should carefully
consider the risks described below in addition to all other information provided to you in this
document and our subsequent filings with the Securities and Exchange Commission. Any of the
following risks could materially and adversely affect our business, results of operations, and
financial condition.
 The current economic downturn could continue to result in a decrease in our future sales, earnings,
and liquidity.
  Current market returns have had a negative impact on the return on plan assets for our pension
plans, which may require significant funding.
  Loss of market share and other financial or operational difficulties due to competition would
likely result in a decrease in our sales and earnings.
   10




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An inability to forecast demand or respond to changes in consumer tastes and fashion trends in a
timely manner could result in a decrease in our future sales and earnings.
  A failure to achieve our projected mix of product sales could result in a decrease in our future
earnings.
  Business failures of large dealers, a group of customers or our own retail stores could result in a
decrease in our future sales and earnings.
  Inventory write-downs or write-offs could result in a decrease in our earnings.
  Sales distribution realignments can result in a decrease in our near-term sales and earnings.
   11




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Manufacturing realignments and cost savings programs could result in a decrease in our near-term
earnings and liquidity.
  Reliance on offshore sourcing of our products subject us to changes in local government regulations
and currency fluctuations which could result in a decrease in our earnings.
  Our operations depend on production facilities located outside the United States which are subject
to increased risks of disrupted production which could cause delays in shipments, loss of
customers, and decreases in sales and earnings.
  Fluctuations in the price, availability, and quality of raw materials could cause delays in
production and could increase the costs of materials which could result in a decrease in our sales
and earnings.
   12




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We are subject to litigation, environmental regulations, and governmental matters that could
adversely impact our sales, earnings, and liquidity.
  Future acquisitions and investments could result in dilution to our earnings per share and a
decrease in the valuation of our common stock.
  Loss of key personnel or the inability to hire qualified personnel could adversely affect our
business.
 Impairment of our trade name intangible assets would result in a decrease in our earnings and net
worth.
  Provisions in our certificate of incorporation and our shareholders rights plan could discourage a
takeover and could result in a decrease in a potential acquirers valuation of our common stock.
   13




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Our growth strategy includes, in part, the development of new stores each year. If we and our
dealers are not able to open new stores or effectively manage the growth of these stores, our
ability to grow and our profitability could be adversely affected.
  We may not be able to comply with our debt agreement or secure additional financing on favorable
terms to meet our future capital needs, which could significantly adversely impact our liquidity
and our business
    14




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Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  Floor Space
    
    OwnedLocation
    
    Type of Facility
    
    (Sq. ft.)
    
        or LeasedSt. Louis, MO
    
    Headquarters
    
    
    53,467
    
    
    LeasedSaltillo, MS
    
    Upholstery plant/distribution center
    
    
    830,200
    
    
    OwnedTupelo, MS
    
    Upholstery plant/distribution center
    
    
    715,951
    
    
    OwnedVerona, MS
    
    Upholstery plant/distribution center/offices
    
    
    423,392
    
    
    OwnedConover, NC
    
    Upholstery plant/distribution center
    
    
    347,500
    
    
    OwnedLenoir, NC
    
    Upholstery plant/distribution center
    
    
    262,878
    
    
    OwnedHigh Point, NC
    
    Upholstery plant/distribution center
    
    
    178,500
    
    
    OwnedConover, NC
    
    Upholstery plant
    
    
    351,015
    
    
    OwnedConover, NC
    
    Upholstery plant
    
    
    123,200
    
    
    OwnedMt. Airy, NC
    
    Upholstery plant
    
    
    102,500
    
    
    OwnedLongview, NC
    
    Upholstery plant
    
    
    260,060
    
    
    LeasedHickory, NC
    
    Upholstery plant/distribution center
    
    
    209,800
    
    
    LeasedAppomattox, VA
    
    Case goods plant/distribution center
    
    
    829,800
    
    
    OwnedLenoir, NC
    
    Case goods plant/distribution center
    
    
    828,000
    
    
    OwnedThomasville, NC
    
    Case goods plant
    
    
    325,000
    
    
    OwnedHickory, NC
    
    Case goods plant/upholstery plant/distribution center
    
    
    519,011
    
    
    OwnedRutherfordton, NC
    
    Distribution center
    
    
    1,009,253
    
    
    OwnedThomasville, NC
    
    Distribution center
    
    
    731,000
    
    
    OwnedMorganton, NC
    
    Distribution center
    
    
    513,800
    
    
    OwnedRialto, CA
    
    Distribution center
    
    
    703,176
    
    
    LeasedLenoir, NC
    
    Distribution center
    
    
    502,420
    
    
    LeasedWren, MS
    
    Distribution center
    
    
    494,813
    
    
    LeasedMarion, NC
    
    Distribution center
    
    
    400,000
    
    
    LeasedLenoir, NC
    
    Distribution center
    
    
    205,964
    
    
    LeasedHigh Point, NC
    
    Distribution center/offices
    
    
    220,000
    
    
    LeasedHigh Point, NC
    
    Component plant
    
    
    187,162
    
    
    OwnedThomasville, NC
    
    Offices/showroom
    
    
    256,000
    
    
    OwnedHigh Point, NC
    
    Offices/showroom
    
    
    100,000
    
    
    OwnedLenoir, NC
    
    Offices
    
    
    136,000
    
    
    OwnedCebu, Philippines
    
    Case goods plant
    
    
    480,338
    
    
    OwnedTambak Aji, Indonesia
    
    Plant/distribution center
    
    
    1,485,419
    
    
    OwnedSemarang, Indonesia
    
    Plant/distribution center
    
    
    215,278
    
    
    LeasedDongguan, China
    
    Offices
    
    
    159,000
    
    
    Leased
  15




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Item 3. Legal Proceedings
   
 Item 4. Submission of Matters to a Vote of Security Holders
  
 PART II
 
 Item 5. Market For Registrants Common Equity, Related Stockholder Matters, and Issuer
Purchases of Equity Securities
    16




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Form 10-K.
   
    17




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Item 6. Selected Financial Data
  Year Ended December 31,(Dollars in thousands except per share data)
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Summary of operations (1):Net sales
    
    $
    1,743,176
    
    
    $
    2,082,056
    
    
    $
    2,361,680
    
    
    $
    2,342,526
    
    
    $
    2,412,341Gross profit
    
    
    314,535
    
    
    
    416,095
    
    
    
    507,875
    
    
    
    523,088
    
    
    
    566,707Interest expense
    
    
    12,510
    
    
    
    37,388
    
    
    
    17,665
    
    
    
    11,877
    
    
    
    15,314Earnings (loss) from continuing
operations before income
tax expense
    
    
    (418,958
    )
    
    
    (80,478
    )
    
    
    72,699
    
    
    
    86,804
    
    
    
    139,708Income tax expense (benefit)
    
    
    (3,157
    )
    
    
    (29,261
    )
    
    
    22,784
    
    
    
    28,781
    
    
    
    49,983Net earnings (loss) from
continuing operations
    
    
    (415,801
    )
    
    
    (51,217
    )
    
    
    49,915
    
    
    
    58,023
    
    
    
    89,725Net earnings from
discontinued operations
    
    
    29,920
    
    
    
    5,568
    
    
    
    5,140
    
    
    
    3,413
    
    
    
    1,841Net earnings (loss)
    
    $
    (385,881
    )
    
    $
    (45,649
    )
    
    $
    55,055
    
    
    $
    61,436
    
    
    $
    91,567Per share of common stock:Net earning (loss)  diluted:Continuing operations
    
    $
    (8.53
    )
    
    $
    (1.06
    )
    
    $
    1.02
    
    
    $
    1.11
    
    
    $
    1.62Discontinued operations
    
    
    0.61
    
    
    
    0.12
    
    
    $
    0.11
    
    
    $
    0.07
    
    
    
    0.03Total
    
    $
    (7.92
    )
    
    $
    (0.94
    )
    
    $
    1.13
    
    
    $
    1.18
    
    
    $
    1.66Dividends
    
    $
    0.12
    
    
    $
    0.64
    
    
    $
    0.64
    
    
    $
    0.60
    
    
    $
    0.525Weighted average common shares
 diluted (in thousands)
    
    
    48,739
    
    
    
    48,446
    
    
    
    48,753
    
    
    
    52,104
    
    
    
    55,220Other information (2):Working capital
    
    $
    458,376
    
    
    $
    712,455
    
    
    $
    752,618
    
    
    $
    718,183
    
    
    $
    711,115Property, plant, and equipment, net
    
    
    150,864
    
    
    
    178,564
    
    
    
    221,398
    
    
    
    250,817
    
    
    
    284,973Capital expenditures
    
    
    18,977
    
    
    
    14,374
    
    
    
    24,713
    
    
    
    28,541
    
    
    
    30,593Total assets
    
    
    999,518
    
    
    
    1,463,078
    
    
    
    1,558,203
    
    
    
    1,582,224
    
    
    
    1,587,759Long-term debt
    
    
    160,000
    
    
    
    280,000
    
    
    
    300,800
    
    
    
    301,600
    
    
    
    302,400Shareholders equity
    
    $
    366,494
    
    
    $
    844,766
    
    
    $
    910,715
    
    
    $
    903,952
    
    
    $
    957,483
 (1)
    
    The companys fiscal year ends on December 31. The subsidiaries included in the consolidated
financial statements report their results of operations as of the Saturday closest to December 31.
Accordingly, the results of operations of our subsidiaries periodically include a 53-week fiscal
year. Fiscal year 2008 was a 53-week fiscal year for our subsidiaries.(2)
    
    Results of operations for all periods presented have been restated to reflect the
classification of Hickory Business Furniture (HBF) as a discontinued operation. HBF was sold in
the first quarter of 2008. Other information prior to 2008 reflects HBF classified as a
discontinued operation in 2007 only.  18




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Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
 Forward-Looking Statements
  Overview
     Business Trends and Strategy
   19




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##### Table of Contents




    
    Closing three domestic manufacturing facilities in 2008, and consolidating or
reconfiguring other facilities;
 
    
    Announced reduction of our domestic workforce by approximately 1,400 employees in
December 2008;
 
    
    Consolidating our administrative and support functions and implementing a shared
services organization;
 
    
    Exiting unprofitable Lane and Broyhill retail stores;
 
    
    Investing in pre-market product consumer testing, innovative product development,
consumer insights, and more effective marketing to increase sales in order to assist us in
regaining market share in the future; and
 
    
    Creating a wholly-owned subsidiary in Asia to gain full control of our overseas
manufacturing, sourcing and logistics activities.
  
    
    We incurred costs of $21.4 million in 2008 and $13.9 million in 2007 related to
unproductive downtime in our factories. As a result, we have taken actions to close or
consolidate several of our manufacturing and administrative facilities. Consequently, we
incurred expense of $18.4 million in 2008 and $12.9 million in 2007 associated with these
facility closures and consolidations, which related primarily to building, equipment, and
other asset write-downs and severance costs.
 
    
    We incurred charges to inventory of $39.8 million in 2008 related to product write-downs
to actual or anticipated sales values in this difficult retail environment.
 
    
    We incurred charges of $11.7 million in 2008 associated with severance actions, which
related primarily to the companys announcement on
December 11, 2008 that it was reducing
its workforce by approximately 15%.
 
    
    We incurred expense of $39.9 million in 2008 and $14.9 million in 2007 associated with
store closures, which related primarily to lease termination and other closed store costs
and resulted from the deteriorating economy and difficult retail environment.
 
    
    We incurred charges of $40.8 million in 2008 and $25.0 million in 2007 related to bad
debt expense. The increase from 2007 to 2008 is primarily due to the weakening retail
environment.
 
    
    We incurred costs of $8.6 million in 2008 related to advisory fees, including $6.7
million to assist with certain strategic initiatives and $1.9 million related to our proxy
contest.
 
    
    We incurred charges of $202.0 million in 2008 and $7.1 million in 2007 related to the
impairment of our goodwill and trade name intangible assets.
 
    
    We recorded a valuation allowance on our deferred tax assets of $156.6 million in 2008,
of which $118.0 million was charged to income tax expense.
   
    
    Continuing to leverage the power of our brands through innovative marketing;
 
    
    Increasing our e-commerce initiatives to help drive more consumer interest in our
products and create more demand for our retail partners;
  20




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
    
    Continuing to leverage our size and scale by offering products that are differentiated
from our competition through pre-launch testing that helps predict end-market acceptance,
by conducting consumer segmentation analysis to assist retailers in allocating marketing
resources, and by growing a global supply chain that minimizes dealer inventory
requirements;
 
    
    Continuing to manage our working capital through improved product development that will
reduce the number of products that we bring to market; and
 
    
    Continuing to improve our operational efficiency through centralized management of our
global manufacturing, planning, sourcing, and logistics functions.
 Results of Operations
  Year Ended December 31,2008
    
    
    2007
    
    
    2006% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofNet
    
    
    
    
    
    
    Net
    
    
    
    
    
    
    Net(Dollars in millions)
    
    Dollars
    
    
    Sales
    
    
    Dollars
    
    
    Sales
    
    
    Dollars
    
    
    SalesNet sales
    
    $
    1,743.2
    
    
    
    100.0
    %
    
    $
    2,082.1
    
    
    
    100.0
    %
    
    $
    2,361.7
    
    
    
    100.0
    %Cost of sales
    
    
    1,428.7
    
    
    
    82.0
    
    
    
    1,666.0
    
    
    
    80.0
    
    
    
    1,853.8
    
    
    
    78.5Gross Profit
    
    
    314.5
    
    
    
    18.0
    
    
    
    416.1
    
    
    
    20.0
    
    
    
    507.9
    
    
    
    21.5Selling, general, and
administrative expenses
    
    
    524.4
    
    
    
    30.1
    
    
    
    462.3
    
    
    
    22.2
    
    
    
    432.3
    
    
    
    18.3Impairment of goodwill
    
    
    166.7
    
    
    
    9.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Impairment of trade names
    
    
    35.3
    
    
    
    2.0
    
    
    
    7.1
    
    
    
    0.4
    
    
    
    
    
    
    
    Earnings (loss) from operations
    
    
    (411.9
    )
    
    
    (23.6
    )
    
    
    (53.3
    )
    
    
    (2.6
    )
    
    
    75.5
    
    
    
    3.2Interest expense
    
    
    12.5
    
    
    
    0.7
    
    
    
    37.4
    
    
    
    1.8
    
    
    
    17.7
    
    
    
    0.7Other income, net
    
    
    5.4
    
    
    
    0.3
    
    
    
    10.2
    
    
    
    0.5
    
    
    
    14.9
    
    
    
    0.6Earnings (loss) from continuing
operations before income
tax expense
    
    
    (419.0
    )
    
    
    (24.0
    )
    
    
    (80.5
    )
    
    
    (3.9
    )
    
    
    72.7
    
    
    
    3.1Income tax expense (benefit)
    
    
    (3.2
    )
    
    
    (0.2
    )
    
    
    (29.3
    )
    
    
    (1.4
    )
    
    
    22.8
    
    
    
    1.0Net earnings (loss) from
continuing operations
    
    $
    (415.8
    )
    
    
    (23.8
    )%
    
    $
    (51.2
    )
    
    
    (2.5
    )%
    
    $
    49.9
    
    
    
    2.1
    %Earnings per common share   diluted:Earning (loss) from
continuing operations
    
    $
    (8.53
    )
    
    
    
    
    
    $
    (1.06
    )
    
    
    
    
    
    $
    1.02
 Year Ended December 31, 2008 Compared to Year Ended December 31, 2007
    21




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##### Table of Contents



Year Ended December 31,2008
    
    
    2007Interest expense
    
    $
    12.5
    
    
    $
    21.1Waiver fees and write off of deferred
financing fees
    
    
    
    
    
    
    2.1Make-whole premium, net of swap gain
    
    
    
    
    
    
    14.2$
    12.5
    
    
    $
    37.4
   Year Ended December 31,2008
    
    
    2007Interest income
    
    $
    2.8
    
    
    $
    3.7Gain on termination of hedge accounting
    
    
    
    
    
    
    4.1Other
    
    
    2.6
    
    
    
    2.4$
    5.4
    
    
    $
    10.2
      22




---



##### Table of Contents



Year Ended December 31, 2007 Compared to Year Ended December 31, 2006
          23




---



##### Table of Contents



Financial Condition and Liquidity
 Liquidity
       24




---



##### Table of Contents



Financing Arrangements
  Asset-based loan
    
    $
    190.0Less: current maturities
    
    
    30.0Long-term debt
    
    $
    160.0
  th
  1 2
    25




---



##### Table of Contents



Less
    
    
    
    
    
    
    
    
    
    
    Morethan 1
    
    
    1-3
    
    
    4-5
    
    
    than 5year
    
    
    years
    
    
    years
    
    
    years
    
    
    TotalLong-term debt obligations:Asset  based loan
    
    $
    30.0
    
    
    $
    
    
    
    $
    160.0
    
    
    $
    
    
    
    $
    190.0Interest expense (1)
    
    
    6.4
    
    
    
    12.5
    
    
    
    3.8
    
    
    
    
    
    
    
    22.7Operating lease obligations

(net of subleases)
    
    
    50.9
    
    
    
    83.9
    
    
    
    61.1
    
    
    
    59.0
    
    
    
    254.9Purchase obligations (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    87.3
    
    
    $
    96.4
    
    
    $
    224.9
    
    
    $
    59.0
    
    
    $
    467.6
 (1)
    
    Interest payments calculated at rates in effect at December 31, 2008.(2)
    
    We are not a party to any long-term supply contracts. We do, in the normal course of business,
initiate purchase orders for the procurement of finished goods, raw materials, and other services.
All purchase orders are based upon current requirements and are fulfilled within a short period of
time.  Other
 Market Risk
  Funded Status of the Defined Benefit Pension Plan
    26




---



##### Table of Contents



Critical Accounting Policies
  Revenue Recognition
  Allowance for Doubtful Accounts
  Inventories
  Intangible Assets
 Goodwill and Other Intangible Assets
    27




---



##### Table of Contents



Lease Termination Costs
 Accounting for
Costs Associated with Exit or Disposal Activities.
 Retirement Plans
   Recently Issued Statements of Financial Accounting Standards
 The Fair Value Option for Financial Assets and Financial
Liabilities  Including an Amendment of FASB Statement No. 115
 Accounting for Deferred
Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance
Arrangements
  28




---



##### Table of Contents



Fair Value Measurements
 Business Combinations
 Noncontrolling Interests in Consolidated Financial Statements  An Amendment of ARB No. 51
 
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
   29




---



##### Table of Contents



Item 8 Financial Statements and Supplementary Data
   Page No.Report of Independent Registered Public Accounting Firm
    
    
    31Consolidated Financial Statements:Consolidated Balance Sheets as of December 31, 2008 and 2007
    
    
    32Consolidated Statements of Operations for each of the years in
the three-year period ended 
December 31, 2008
    
    
    33Consolidated Statements of Cash Flows for each of the years in
the three-year period ended
 December 31, 2008
    
    
    34Consolidated Statements of Shareholders Equity and
Comprehensive Income (loss) for each of the years in the
three-year period ended December 31, 2008
    
    
    35Notes to Consolidated Financial Statements
    
    
    36Consolidated Financial Statement Schedules:Schedule IIValuation and qualifying accounts
    
    
    65
  30




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Accounting for Uncertainty in Income Taxes Employers Accounting for Defined Benefits Pension and
Other Postretirement Plans,
 Internal Control 
Integrated Framework
  
  31




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##### Table of Contents



FURNITURE BRANDS INTERNATIONAL, INC.
 
 CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    December 31,(Dollars in thousands)
    
    2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    106,580
    
    
    $
    118,764Cash  restricted
    
    
    
    
    
    
    20,000Receivables, less allowances of $34,372
($45,467 at December 31, 2007)
    
    
    178,590
    
    
    
    292,694Income tax refund receivable
    
    
    38,090
    
    
    
    7,049Inventories
    
    
    350,026
    
    
    
    401,302Deferred income taxes
    
    
    
    
    
    
    36,978Prepaid expenses and other current assets
    
    
    12,592
    
    
    
    10,831Current assets of discontinued operations
    
    
    
    
    
    
    12,236Total current assets
    
    
    685,878
    
    
    
    899,854Property, plant, and equipment, net
    
    
    150,864
    
    
    
    178,564Goodwill
    
    
    
    
    
    
    167,356Trade names
    
    
    127,300
    
    
    
    162,571Other assets
    
    
    35,476
    
    
    
    36,770Noncurrent assets of discontinued operations
    
    
    
    
    
    
    17,963Total assets
    
    $
    999,518
    
    
    $
    1,463,078Liabilities and Shareholders EquityCurrent liabilities:Current maturities of long-term debt
    
    $
    30,000
    
    
    $
    20,800Accounts payable
    
    
    85,206
    
    
    
    93,557Accrued employee compensation
    
    
    49,082
    
    
    
    21,633Other accrued expenses
    
    
    63,214
    
    
    
    46,102Current liabilities of discontinued operations
    
    
    
    
    
    
    5,307Total current liabilities
    
    
    227,502
    
    
    
    187,399Long-term debt
    
    
    160,000
    
    
    
    280,000Deferred income taxes
    
    
    27,917
    
    
    
    28,859Pension liability
    
    
    137,199
    
    
    
    50,899Other long-term liabilities
    
    
    80,406
    
    
    
    71,014Noncurrent liabilities of discontinued operations
    
    
    
    
    
    
    141Shareholders equity:Preferred stock, 10,000,000 shares authorized,
no par value  none issued
    
    
    
    
    
    
    Common stock, 200,000,000 shares authorized,
$1.00 stated value  56,482,541 shares issued at
December 31, 2008 and December 31, 2007
    
    
    56,483
    
    
    
    56,483Paid-in capital
    
    
    224,419
    
    
    
    226,773Retained earnings
    
    
    376,515
    
    
    
    768,731Accumulated other comprehensive expense
    
    
    (116,988
    )
    
    
    (26,965
    )Treasury stock at cost (7,704,764) shares at December 31, 2008
and 7,984,370 shares at December 31, 2007)
    
    
    (173,935
    )
    
    
    (180,256
    )Total shareholders equity
    
    
    366,494
    
    
    
    844,766Total liabilities and shareholders equity
    
    $
    999,518
    
    
    $
    1,463,078
   32




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##### Table of Contents



FURNITURE BRANDS INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Year Ended December 31,(In thousands except per share data)
    
    2008
    
    
    2007
    
    
    2006Net sales
    
    $
    1,743,176
    
    
    $
    2,082,056
    
    
    $
    2,361,680Cost of sales
    
    
    1,428,641
    
    
    
    1,665,961
    
    
    
    1,853,805Gross profit
    
    
    314,535
    
    
    
    416,095
    
    
    
    507,875Selling, general, and administrative expenses
    
    
    524,457
    
    
    
    462,334
    
    
    
    432,336Impairment of goodwill
    
    
    166,680
    
    
    
    
    
    
    
    Impairment of trade names
    
    
    35,271
    
    
    
    7,100
    
    
    
    Operating earnings (loss)
    
    
    (411,873
    )
    
    
    (53,339
    )
    
    
    75,539Interest expense
    
    
    12,510
    
    
    
    37,388
    
    
    
    17,665Other income, net
    
    
    5,425
    
    
    
    10,249
    
    
    
    14,825Earnings (loss) from continuing operations
before income tax expense
    
    
    (418,958
    )
    
    
    (80,478
    )
    
    
    72,699Income tax expense (benefit)
    
    
    (3,157
    )
    
    
    (29,261
    )
    
    
    22,784Net earnings (loss) from continuing operations
    
    
    (415,801
    )
    
    
    (51,217
    )
    
    
    49,915Net earnings from discontinued operations
    
    
    29,920
    
    
    
    5,568
    
    
    
    5,140Net earnings (loss)
    
    $
    (385,881
    )
    
    $
    (45,649
    )
    
    $
    55,055Earnings per common share  basic and diluted:Earnings (loss) from continuing operations
    
    $
    (8.53
    )
    
    $
    (1.06
    )
    
    $
    1.02Earnings from discontinued operations
    
    
    0.61
    
    
    
    0.12
    
    
    
    0.11Net earnings (loss)
    
    $
    (7.92
    )
    
    $
    (0.94
    )
    
    $
    1.13Weighted average shares of common stock outstanding:Basic
    
    
    48,739
    
    
    
    48,446
    
    
    
    48,753Diluted
    
    
    48,739
    
    
    
    48,446
    
    
    
    48,753
   33




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##### Table of Contents



FURNITURE BRANDS INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended December 31,(Dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006Cash flows from operating activities:Net earnings (loss)
    
    $
    (385,881
    )
    
    $
    (45,649
    )
    
    $
    55,055Adjustments to reconcile net earnings (loss)To net cash provided by (used in)operating activities:Depreciation
    
    
    25,307
    
    
    
    31,473
    
    
    
    38,161Compensation expense related to stock option grants
and restricted stock awards
    
    
    4,310
    
    
    
    3,251
    
    
    
    6,142Tax benefit from the exercise of stock options
    
    
    
    
    
    
    
    
    
    
    411Provision (benefit) for deferred income taxes
    
    
    41,799
    
    
    
    (20,080
    )
    
    
    (15,384
    )Gain on sale of discontinued operations
    
    
    (48,109
    )
    
    
    
    
    
    
    Impairment of intangible assets
    
    
    201,951
    
    
    
    7,100Other, net
    
    
    16,360
    
    
    
    6,713
    
    
    
    (7,406
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    110,073
    
    
    
    63,627
    
    
    
    (13,355
    )Income tax refund receivable
    
    
    (31,041
    )
    
    
    (7,049
    )
    
    
    Inventories
    
    
    66,548
    
    
    
    100,019
    
    
    
    (69,256
    )Prepaid expenses and other assets
    
    
    4,741
    
    
    
    9,708
    
    
    
    (2,795
    )Accounts payable and other accrued expenses
    
    
    24,295
    
    
    
    (12,482
    )
    
    
    (31,971
    )Other long-term liabilities
    
    
    11,029
    
    
    
    16,258
    
    
    
    13,525Net cash provided by (used in) operating activities
    
    
    41,382
    
    
    
    152,889
    
    
    
    (26,873
    )Cash flows from investing activities:Acquisition of stores, net of cash acquired
    
    
    (14,659
    )
    
    
    (4,241
    )
    
    
    Proceeds from the sale of business, net of cash sold
    
    
    73,359
    
    
    
    
    
    
    
    Proceeds from the disposal of assets
    
    
    3,363
    
    
    
    23,161
    
    
    
    9,941Additions to property, plant, and equipment
    
    
    (18,977
    )
    
    
    (14,374
    )
    
    
    (24,713
    )Net cash provided by (used in) investing activities
    
    
    43,086
    
    
    
    4,546
    
    
    
    (14,772
    )Cash flows from financing activities:Proceeds from termination of cash flow hedges
    
    
    
    
    
    
    
    
    
    
    8,623Payments for debt issuance costs
    
    
    
    
    
    
    (3,424
    )
    
    
    (1,307
    )Additions to long-term debt
    
    
    
    
    
    
    325,401
    
    
    
    470,000Payments of long-term debt
    
    
    (110,800
    )
    
    
    (336,201
    )
    
    
    (460,800
    )Funding of restricted cash account
    
    
    
    
    
    
    (20,000
    )
    
    
    Restricted cash used for the payment of long-term debt
    
    
    20,000
    
    
    
    
    
    
    
    Proceeds from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    8,305Tax benefit from the exercise of stock options
    
    
    
    
    
    
    
    
    
    
    411Payments of cash dividends
    
    
    (5,844
    )
    
    
    (31,012
    )
    
    
    (31,269
    )Payments for the purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    (40,075
    )Other
    
    
    (8
    )
    
    
    
    
    
    
    Net cash used in financing activities
    
    
    (96,652
    )
    
    
    (65,236
    )
    
    
    (46,112
    )Net increase (decrease) in cash and cash equivalents
    
    
    (12,184
    )
    
    
    92,199
    
    
    
    (87,757
    )Cash and cash equivalents at beginning of period
    
    
    118,764
    
    
    
    26,565
    
    
    
    114,322Cash and cash equivalents at end of period
    
    $
    106,580
    
    
    $
    118,764
    
    
    $
    26,565Supplemental Disclosure:Cash payments for income taxes, net
    
    $
    2,039
    
    
    $
    1,776
    
    
    $
    59,447Cash payments for interest expense
    
    $
    13,372
    
    
    $
    34,689
    
    
    $
    15,581
   34




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##### Table of Contents



FURNITURE BRANDS INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND
 COMPREHENSIVE INCOME (LOSS)
 Year Ended December 31,(Dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006Common Stock:Beginning balance
    
    $
    56,483
    
    
    $
    56,483
    
    
    $
    56,483Stock plans activity
    
    
    
    
    
    
    
    
    
    
    Ending balance
    
    $
    56,483
    
    
    $
    56,483
    
    
    $
    56,483Paid-In Capital:Beginning balance
    
    $
    226,773
    
    
    $
    227,520
    
    
    $
    221,754Stock plans activity
    
    
    (2,354
    )
    
    
    (747
    )
    
    
    5,766Ending balance
    
    $
    224,419
    
    
    $
    226,773
    
    
    $
    227,520Retained Earnings:Beginning balance
    
    $
    768,731
    
    
    $
    843,811
    
    
    $
    820,025Net earnings (loss)
    
    
    (385,881
    )
    
    
    (45,649
    )
    
    
    55,055Adjustment to adopt FIN 48
    
    
    
    
    
    
    1,581
    
    
    
    Adjustment to adopt EITF 06-4
    
    
    (491
    )
    
    
    
    
    
    
    Cash dividends (per share 2008-$0.12, 2007-$0.64, 2006-$0.64)
    
    
    (5,844
    )
    
    
    (31,012
    )
    
    
    (31,269
    )Ending balance
    
    $
    376,515
    
    
    $
    768,731
    
    
    $
    843,811Accumulated Other Comprehensive Income (Expense):Beginning balance
    
    $
    (26,965
    )
    
    $
    (33,188
    )
    
    $
    (41,382
    )Other comprehensive income (expense)
    
    
    (90,023
    )
    
    
    6,223
    
    
    
    13,244Adjustment to initially apply SFAS No. 158,
net of income tax benefit of $3,031
    
    
    
    
    
    
    
    
    
    
    (5,050
    )Ending balance
    
    $
    (116,988
    )
    
    $
    (26,965
    )
    
    $
    (33,188
    )Treasury Stock:Beginning balance
    
    $
    (180,256
    )
    
    $
    (183,911
    )
    
    $
    (152,928
    )Stock plans activity
    
    
    6,321
    
    
    
    3,655
    
    
    
    9,092Purchase of treasury stock

(1,734,951 shares in 2006)
    
    
    
    
    
    
    
    
    
    
    (40,075
    )Ending balance
    
    $
    (173,935
    )
    
    $
    (180,256
    )
    
    $
    (183,911
    )Total Shareholders Equity
    
    $
    366,494
    
    
    $
    844,766
    
    
    $
    910,715Comprehensive income (loss):Net earnings
    
    $
    (385,881
    )
    
    $
    (45,649
    )
    
    $
    55,055Other comprehensive income, net of tax:Pension liability
    
    
    (85,632
    )
    
    
    2,784
    
    
    
    17,736Foreign currency translation
    
    
    (4,391
    )
    
    
    3,439
    
    
    
    1,171Financial instruments accounted for as hedges
    
    
    
    
    
    
    
    
    
    
    (5,663
    )Other comprehensive income (expense)
    
    $
    (90,023
    )
    
    $
    6,223
    
    
    $
    13,244$
    (475,904
    )
    
    $
    (39,426
    )
    
    $
    68,299
   35




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##### Table of Contents



FURNITURE BRANDS INTERNATIONAL, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  1. THE COMPANY
    2. SIGNIFICANT ACCOUNTING POLICIES
  Use of Estimates
  Principles of Consolidation
  Cash and Cash Equivalents
   36




---



##### Table of Contents



Allowance for Doubtful Accounts
  Inventories
  Property, Plant, and Equipment
  Goodwill and Trade Names
 Goodwill and Other
Intangible Assets
   Fair Value of Financial Instruments
     37




---



##### Table of Contents



Revenue Recognition
  Advertising Costs
  Stock-Based Compensation
  Income Taxes
   Lease Termination Costs
 Accounting for
Costs Associated with Exit or Disposal Activities
 Reclassifications
 Accounting for the Impairment or Disposal of Long-Lived Assets.
  38




---



##### Table of Contents



3. ACQUISITIONS
    4. RESTRUCTURING AND ASSET IMPAIRMENT CHARGES
     Year Ended December 31,2008
    
    
    2007
    
    
    2006Restructuring charges:Facility costs to shutdown, cleanup, and vacate
    
    $
    586
    
    
    $
    681
    
    
    $
    1,675Termination benefits
    
    
    13,132
    
    
    
    8,475
    
    
    
    2,873Closed store occupancy and lease termination
costs
    
    
    13,895
    
    
    
    
    
    
    
    Closed store lease liabilities
    
    
    23,158
    
    
    
    7,217
    
    
    
    Inventory write-downs
    
    
    
    
    
    
    
    
    
    
    71350,771
    
    
    
    16,373
    
    
    
    5,261Impairment charges
    
    
    17,593
    
    
    
    11,502
    
    
    
    2,142$
    68,364
    
    
    
    27,875
    
    
    $
    7,403Statement of Operations classification:Cost of sales
    
    $
    7,007
    
    
    $
    5,784
    
    
    $
    5,280Selling, general, and administrative expenses
    
    
    61,357
    
    
    
    22,091
    
    
    
    2,123$
    68,364
    
    
    $
    27,875
    
    
    $
    7,403
  39




---



##### Table of Contents



Year Ended December 31,2008
    
    
    2007Accrual for
closed store lease liabilities:Accrual for closed store lease liabilities at January 1
    
    $
    7,217
    
    
    $
    Charges to expense
    
    
    23,158
    
    
    
    7,217Cash payments
    
    
    2,457
    
    
    
    Accrual for closed store lease liabilities at December 31
    
    $
    27,918
    
    
    $
    7,217
   Year Ended December 31,2008
    
    
    2007Accrual for termination benefits:Accrual for termination benefits at January 1
    
    $
    
    
    
    $
    Charges to expense
    
    
    13,132
    
    
    
    8,475Cash payments
    
    
    3,120
    
    
    
    8,475Accrual for termination benefits at December 31
    
    $
    10,012
    
    
    $
    
  5. INVENTORIES
  December 31,
    
    
    December 31,2008
    
    
    2007Finished products
    
    $
    238,908
    
    
    $
    283,236Work-in-process
    
    
    21,405
    
    
    
    24,005Raw materials
    
    
    89,713
    
    
    
    94,061$
    350,026
    
    
    $
    401,302
 6. PROPERTY, PLANT, AND EQUIPMENT
  December 31,
    
    
    December 31,2008
    
    
    2007Land
    
    $
    16,027
    
    
    $
    16,964Buildings and improvements
    
    
    198,836
    
    
    
    225,352Machinery and equipment
    
    
    270,597
    
    
    
    268,862485,460
    
    
    
    511,178Less accumulated depreciation
    
    
    334,596
    
    
    
    332,614$
    150,864
    
    
    $
    178,564
   40




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##### Table of Contents



7. GOODWILL AND TRADE NAMES
  December 31,
    
    
    December 31,2008
    
    
    2007GoodwillBeginning balance
    
    $
    167,356
    
    
    $
    182,652Impairment
    
    
    (166,680
    )
    
    
    Income tax benefit of deductible goodwill
    
    
    (676
    )
    
    
    (676
    )Amount associated with discontinued operation
    
    
    
    
    
    
    (14,276
    )Other
    
    
    
    
    
    
    (344
    )Ending balance
    
    $
    
    
    
    $
    167,356Trade namesBeginning balance
    
    $
    162,571
    
    
    $
    169,671Impairment
    
    
    (35,271
    )
    
    
    (7,100
    )Ending balance
    
    $
    127,300
    
    
    $
    162,571
    8. LONG-TERM DEBT
  December 31,
    
    
    December 31,2008
    
    
    2007Asset-based loan
    
    $
    190,000
    
    
    $
    300,000Other
    
    
    
    
    
    
    800190,000
    
    
    
    300,800Less: current maturities
    
    
    30,000
    
    
    
    20,800Long-term debt
    
    $
    160,000
    
    
    $
    280,000
  41




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th
  1 2
    42




---



##### Table of Contents



9. LIQUIDITY
    10. STOCK OPTIONS AND RESTRICTED STOCK AWARDS
    43




---



##### Table of Contents



2008
    
    
    2007
    
    
    2006Risk-free interest rate
    
    
    2.6
    %
    
    
    4.9
    %
    
    
    4.4
    %Expected dividend yield
    
    
    1.4
    %
    
    
    4.2
    %
    
    
    2.5
    %Expected life (in years)
    
    
    5.1
    
    
    
    6.0
    
    
    
    5.6Expected volatility
    
    
    41.1
    %
    
    
    36.5
    %
    
    
    39.8
    %
   2008
    
    
    2007
    
    
    2006Weighted average fair value per share of options granted
    
    $
    3.91
    
    
    $
    4.25
    
    
    $
    8.37Total intrinsic value of stock options exercised
    
    $
    
    
    
    $
    
    
    
    $
    1,481
  WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Term (Years)
    
    
    ValueOutstanding at December 31, 2007
    
    
    3,262,617
    
    
    $
    23.25Granted
    
    
    829,000
    
    
    
    11.19Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    (480,925
    )
    
    
    22.80Outstanding at December 31, 2008
    
    
    3,610,692
    
    
    $
    20.54
    
    
    
    5.3
    
    
    $
    Exercisable at December 31, 2008
    
    
    2,435,398
    
    
    $
    23.77
    
    
    
    3.7
    
    
    $
    
   WeightedAverageGrant-DateShares
    
    
    Fair ValueOutstanding at December 31, 2007
    
    
    197,867
    
    
    $
    16.63Granted
    
    
    344,559
    
    
    
    11.55Vested
    
    
    (13,834
    )
    
    
    15.72Forfeited
    
    
    (77,091
    )
    
    
    17.63Outstanding at December 31, 2008
    
    
    451,501
    
    
    $
    12.61
   44




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##### Table of Contents



11. COMMON STOCK
    Year Ended December 31,2008
    
    
    2007
    
    
    2006Weighted average shares used for
basic earnings per common share
    
    
    48,738,788
    
    
    
    48,445,948
    
    
    
    48,753,006Effect of dilutive securities:Stock options
    
    
    
    
    
    
    
    
    
    
    Weighted average shares used for
diluted earnings per common share
    
    
    48,738,788
    
    
    
    48,445,948
    
    
    
    48,753,006
   12. INCOME TAXES
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Income (loss) from continuing operations before
income tax expense:United States operations
    
    $
    (411,558
    )
    
    $
    (80,074
    )
    
    $
    67,185Foreign operations
    
    
    (7,400
    )
    
    
    (404
    )
    
    
    5,514$
    (418,958
    )
    
    $
    (80,478
    )
    
    $
    72,699
  Year Ended December 31,2008
    
    
    2007
    
    
    2006Current:Federal
    
    $
    (50,186
    )
    
    $
    (11,742
    )
    
    $
    34,242State and local
    
    
    (600
    )
    
    
    1,487
    
    
    
    2,170Foreign
    
    
    539
    
    
    
    1,074
    
    
    
    1,345(50,247
    )
    
    
    (9,181
    )
    
    
    37,757Deferred
    
    
    47,090
    
    
    
    (20,080
    )
    
    
    (14,973
    )Income tax expense (benefit):
    
    $
    (3,157
    )
    
    $
    (29,261
    )
    
    $
    22,784
  45




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Year Ended December 31,2008
    
    
    2007
    
    
    2006Federal corporate statutory rate
    
    
    (35.0
    )%
    
    
    (35.0
    )%
    
    
    35.0
    %State and local income taxes, net of
federal tax benefit
    
    
    (1.0
    )
    
    
    (4.6
    )
    
    
    2.1Foreign rate differential
    
    
    0.6
    
    
    
    0.8
    
    
    
    (1.9
    )Non-taxable income
    
    
    0.0
    
    
    
    0.1
    
    
    
    (1.2
    )Non-deductible goodwill
    
    
    6.4
    
    
    
    0.0
    
    
    
    0.0Valuation allowance
    
    
    28.2
    
    
    
    0.9
    
    
    
    (0.5
    )Other
    
    
    (0.0
    )
    
    
    1.4
    
    
    
    (2.2
    )Effective income tax rate
    
    
    (0.8
    )%
    
    
    (36.4
    )%
    
    
    31.3
    %
  December 31,
    
    
    December 31,2008
    
    
    2007Deferred tax assets attributable to:Expense accruals
    
    $
    70,392
    
    
    $
    63,667Employee pension and other benefit plans
    
    
    56,280
    
    
    
    22,369Property, plant, and equipment
    
    
    9,550
    
    
    
    Goodwill
    
    
    9,057
    
    
    
    Net operating loss carryforward
    
    
    23,180
    
    
    
    9,313Other
    
    
    2,050
    
    
    
    2,678Total deferred tax assets
    
    
    170,509
    
    
    
    98,027Deferred tax liabilities attributable to:Intangible assets
    
    
    (38,627
    )
    
    
    (80,266
    )Property, plant, and equipment
    
    
    
    
    
    
    (95
    )Inventory costs capitalized
    
    
    (2,993
    )
    
    
    (2,888
    )Prepaid expenses
    
    
    (1,234
    )
    
    
    (1,805
    )Total deferred tax liabilities
    
    
    (42,854
    )
    
    
    (85,054
    )Valuation allowance
    
    
    (161,426
    )
    
    
    (4,854
    )Net deferred tax assets (liabilities)
    
    $
    (33,771
    )
    
    $
    8,119
  Accounting for Income Taxes.
  46




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Accounting for
Uncertainty in Income Taxes
  2008
    
    
    2007Beginning balance  January 1
    
    $
    9,559
    
    
    $
    12,697Tax positions related to prior yearsAdditions
    
    
    1,173
    
    
    
    964Reductions
    
    
    
    
    
    
    Tax positions related to current yearAdditions
    
    
    1,567
    
    
    
    396Reductions
    
    
    
    
    
    
    Settlements
    
    
    (419
    )
    
    
    (2,761
    )Lapses in statute of limitations
    
    
    (1,583
    )
    
    
    (1,737
    )Ending balance  December 31
    
    $
    10,297
    
    
    $
    9,559
  13. EMPLOYEE BENEFITS
  Year Ended December 31,2008
    
    
    2007
    
    
    2006Defined benefit plan
    
    $
    3,906
    
    
    $
    8,065
    
    
    $
    11,409Defined contribution plan (401k plan)
    
    
    9,245
    
    
    
    10,348
    
    
    
    11,662Other
    
    
    425
    
    
    
    1,019
    
    
    
    453$
    13,576
    
    
    $
    19,432
    
    
    $
    23,524
  47




---



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Year
    
    Amount2009
    
    $
    25,1922010
    
    
    26,4062011
    
    
    27,6552012
    
    
    28,9822013
    
    
    30,3592014  2018
    
    $
    174,497
     48




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##### Table of Contents



December 31, 2008
    
    
    December 31, 2007Qualified
    
    
    Non-Qualified
    
    
    Qualified
    
    
    Non-QualifiedPlan
    
    
    Plan
    
    
    Plan
    
    
    PlanChange in projected benefit obligation:Beginning of year
    
    $
    403,994
    
    
    $
    26,810
    
    
    $
    402,202
    
    
    $
    27,782Service cost
    
    
    3,196
    
    
    
    344
    
    
    
    4,158
    
    
    
    340Interest cost
    
    
    24,318
    
    
    
    1,422
    
    
    
    23,721
    
    
    
    1,506Actuarial (gain) loss
    
    
    (9,297
    )
    
    
    (4,806
    )
    
    
    (5,379
    )
    
    
    (1,415
    )Benefits paid
    
    
    (21,954
    )
    
    
    (1,679
    )
    
    
    (20,708
    )
    
    
    (1,403
    )Curtailments
    
    
    34
    
    
    
    (725
    )
    
    
    
    
    
    
    End of year
    
    $
    400,291
    
    
    $
    21,366
    
    
    $
    403,994
    
    
    $
    26,810Change in fair value of plan assets:Beginning of year
    
    $
    380,743
    
    
    $
    
    
    
    $
    368,629
    
    
    $
    Actual return on plan assets
    
    
    (74,413
    )
    
    
    
    
    
    
    20,822
    
    
    
    Employer contributions
    
    
    
    
    
    
    1,679
    
    
    
    12,000
    
    
    
    1,403Benefits paid
    
    
    (21,954
    )
    
    
    (1,679
    )
    
    
    (20,708
    )
    
    
    (1,403
    )End of year
    
    $
    284,376
    
    
    $
    
    
    
    $
    380,743
    
    
    $
    Accrued pension cost
    
    $
    (115,915
    )
    
    $
    (21,366
    )
    
    $
    (23,251
    )
    
    $
    (26,810
    )Accumulated benefit obligation
    
    $
    399,372
    
    
    $
    21,366
    
    
    $
    398,895
    
    
    $
    26,249
  Percentage of Plan AssetsDecember 31,
    
    
    December 31,Target
    
    
    2008
    
    
    2007Equity securities
    
    
    55
    %
    
    
    48
    %
    
    
    55
    %Debt securities
    
    
    45
    %
    
    
    52
    %
    
    
    45
    %100
    %
    
    
    100
    %
    
    
    100
    %
   Year Ended December 31,2008
    
    
    2007
    
    
    2006Service cost-benefits earned during the period
    
    $
    3,539
    
    
    $
    4,498
    
    
    $
    5,281Interest cost on the projected benefit obligation
    
    
    25,740
    
    
    
    25,228
    
    
    
    24,600Expected return on plan assets
    
    
    (27,610
    )
    
    
    (26,265
    )
    
    
    (25,499
    )Net amortization and deferral
    
    
    2,685
    
    
    
    4,604
    
    
    
    7,027Curtailment gain
    
    
    (448
    )
    
    
    
    
    
    
    Net periodic pension expense
    
    $
    3,906
    
    
    $
    8,065
    
    
    $
    11,409
  49




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##### Table of Contents



Year Ended December 31,2008
    
    
    2007Actuarial (gain)/loss
    
    $
    89,413
    
    
    $
    149Recognition of actuarial loss
    
    
    (2,631
    )
    
    
    (4,532
    )Recognition of prior service cost
    
    
    (296
    )
    
    
    (73
    )Total recognized in other comprehensive expense
    
    $
    86,486
    
    
    $
    (4,456
    )
  December 31,
 2008
    
    
    December 31,
 2007Net actuarial loss
    
    $
    (136,183
    )
    
    $
    (49,401
    )Prior service cost
    
    
    (123
    )
    
    
    (419
    )Tax benefits
    
    
    (19,536
    )
    
    
    (18,682
    )Ending balance  December 31
    
    $
    (116,770
    )
    
    $
    (31,138
    )
   Actuarial loss
    
    $
    4,390Prior service cost
    
    
    27Total estimated amortization into net periodic benefit cost in 2009
    
    $
    4,417
  2008
    
    
    2007
    
    
    2006Assumptions used to determine net pension expense:Expected long-term rate of return on plan assets
    
    
    7.50
    %
    
    
    7.50
    %
    
    
    7.50
    %Average discount rate
    
    
    6.25
    %
    
    
    6.00
    %
    
    
    5.75
    %Long-term rate of compensation increase
    
    
    3.50
    %
    
    
    3.50
    %
    
    
    3.50
    %Assumptions used to determine benefit obligation as
of December 31:Average discount rates
    
    
    6.25
    %
    
    
    6.25
    %
    
    
    6.00
    %Long-term rate of compensation increase
    
    
    1.50
    %
    
    
    3.50
    %
    
    
    3.50
    %
    14. OTHER LONG-TERM LIABILITIES
   50




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15. OTHER COMPREHENSIVE INCOME (EXPENSE)
  Year Ended December 31,2008
    
    
    2007
    
    
    2006Pension liability
    
    $
    (86,486
    )
    
    $
    4,456
    
    
    $
    27,787Foreign currency translation
    
    
    (4,391
    )
    
    
    3,439
    
    
    
    1,171Change in fair value of financial
instruments accounted for as hedges
    
    
    
    
    
    
    
    
    
    
    (8,714
    )(90,877
    )
    
    
    7,895
    
    
    
    20,244Income tax expense (benefit)
    
    
    (854
    )
    
    
    1,672
    
    
    
    7,000$
    (90,023
    )
    
    $
    6,223
    
    
    $
    13,244
  December 31,
    
    
    December 31,2008
    
    
    2007Pension liability
    
    $
    (116,770
    )
    
    $
    (31,138
    )Foreign currency translation
    
    
    (218
    )
    
    
    4,173$
    (116,988
    )
    
    $
    (26,965
    )
 16. LEASES
  Year Ended December 31,2008
    
    
    2007
    
    
    2006Rent expense
    
    $
    91,433
    
    
    $
    71,046
    
    
    $
    57,396Sublease income
    
    
    (8,692
    )
    
    
    (13,707
    )
    
    
    (16,912
    )Net rent expense
    
    $
    82,741
    
    
    $
    57,339
    
    
    $
    40,484
   Minimum
    
    
    Minimum
    
    
    TotalLease
    
    
    Lease
    
    
    Minimum
    
    
    
    
    
    
    Net MinimumPayments
    
    
    Payments
    
    
    Lease
    
    
    Sublease
    
    
    LeaseYear
    
    Open Facilities
    
    
    Closed Stores
    
    
    Payments
    
    
    Income
    
    
    Payments2009
    
    $
    48,175
    
    
    $
    8,766
    
    
    $
    56,941
    
    
    $
    6,003
    
    
    $
    50,9382010
    
    
    42,967
    
    
    
    8,746
    
    
    
    51,713
    
    
    
    6,212
    
    
    
    45,5012011
    
    
    35,816
    
    
    
    8,855
    
    
    
    44,671
    
    
    
    6,300
    
    
    
    38,3712012
    
    
    31,279
    
    
    
    8,893
    
    
    
    40,172
    
    
    
    6,083
    
    
    
    34,0892013
    
    
    23,496
    
    
    
    8,414
    
    
    
    31,910
    
    
    
    4,870
    
    
    
    27,040thereafter
    
    
    48,481
    
    
    
    15,099
    
    
    
    63,580
    
    
    
    4,601
    
    
    
    58,979$
    230,214
    
    
    $
    58,773
    
    
    $
    288,987
    
    
    $
    34,069
    
    
    $
    254,918
   51




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##### Table of Contents



17. CONTINGENT LIABILITIES
    2008
    
    
    2007
    
    
    2006Beginning balance
    
    $
    11,024
    
    
    $
    10,334
    
    
    $
    9,351Additions charged to cost and expenses
    
    
    19,014
    
    
    
    26,797
    
    
    
    28,474Deductions from reserves
    
    
    19,376
    
    
    
    26,107
    
    
    
    27,491Ending balance
    
    $
    10,662
    
    
    $
    11,024
    
    
    $
    10,334
 18. OTHER INCOME, NET
  2008
    
    
    2007
    
    
    2006Interest income
    
    $
    2,845
    
    
    $
    3,686
    
    
    $
    2,594Gain on termination of hedge accounting
    
    
    
    
    
    
    4,094
    
    
    
    8,916Other, net
    
    
    2,580
    
    
    
    2,469
    
    
    
    3,315$
    5,425
    
    
    $
    10,249
    
    
    $
    14,825
  52




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19. DISCONTINUED OPERATIONS
 Accounting for the Impairment or Disposal of Long-Lived Assets.
  :
 2008
    
    
    2007
    
    
    2006Net sales
    
    $
    15,348
    
    
    $
    63,606
    
    
    $
    56,495Earnings before income tax expense
    
    
    1,734
    
    
    
    9,086
    
    
    
    8,223Net earnings
    
    $
    1,052
    
    
    $
    5,568
    
    
    $
    5,140
 20. CHANGE IN ESTIMATES
  21. RECENTLY ISSUED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS
 The Fair Value Option for Financial Assets and Financial
Liabilities  Including an Amendment of FASB Statement No. 115
 Accounting for Deferred
Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance
Arrangements
  53




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##### Table of Contents



Fair Value Measurements
 Business Combinations
 Noncontrolling Interests in Consolidated Financial Statements  An Amendment of ARB No. 51
  54




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22. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
  Fourth
    
    
    Third
    
    
    Second
    
    
    FirstQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterYear ended December 31, 2008:Net sales
    
    $
    403,353
    
    
    $
    412,753
    
    
    $
    449,870
    
    
    $
    477,200Gross profit
    
    
    36,044
    
    
    
    67,122
    
    
    
    100,350
    
    
    
    111,019Net earnings/(loss):Continuing operations
    
    $
    (353,862
    )
    
    $
    (41,721
    )
    
    $
    (23,966
    )
    
    $
    3,748Discontinued operations
    
    
    
    
    
    
    
    
    
    
    52
    
    
    
    29,868Total
    
    $
    (353,862
    )
    
    $
    (41,721
    )
    
    $
    (23,914
    )
    
    $
    33,616Earnings/(loss) per common share 
Diluted:Continuing operations
    
    $
    (7.26
    )
    
    $
    (0.86
    )
    
    $
    (0.49
    )
    
    $
    0.08Discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.62Total
    
    $
    (7.26
    )
    
    $
    (0.86
    )
    
    $
    (0.49
    )
    
    $
    0.69Dividends declared per common share
    
    
    
    
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.04Common stock price range:High
    
    $
    11.24
    
    
    $
    13.61
    
    
    $
    15.46
    
    
    $
    13.64Low
    
    $
    1.66
    
    
    $
    8.48
    
    
    $
    11.80
    
    
    $
    6.82Year ended December 31, 2007:Net sales
    
    $
    504,786
    
    
    $
    500,840
    
    
    $
    519,471
    
    
    $
    556,959Gross profit
    
    
    85,302
    
    
    
    103,048
    
    
    
    109,870
    
    
    
    117,875Net earnings/(loss):Continuing operations
    
    $
    (41,809
    )
    
    $
    (15,132
    )
    
    $
    4,421
    
    
    $
    1,303Discontinued operations
    
    
    1,131
    
    
    
    1,476
    
    
    
    1,387
    
    
    
    1,574Total
    
    $
    (40,678
    )
    
    $
    (13,656
    )
    
    $
    5,808
    
    
    $
    2,877Earnings/(loss) per common share 
Diluted:Continuing operations
    
    $
    (0.86
    )
    
    $
    (0.31
    )
    
    $
    0.09
    
    
    $
    0.03Discontinued operations
    
    
    0.02
    
    
    
    0.03
    
    
    
    0.03
    
    
    
    0.03Total
    
    $
    (0.84
    )
    
    $
    (0.28
    )
    
    $
    0.12
    
    
    $
    0.06Dividends declared per common share
    
    $
    0.16
    
    
    $
    0.16
    
    
    $
    0.16
    
    
    $
    0.16Common stock price range:High
    
    $
    14.96
    
    
    $
    14.33
    
    
    $
    16.56
    
    
    $
    17.94Low
    
    $
    9.60
    
    
    $
    9.26
    
    
    $
    13.49
    
    
    $
    15.04
   55




---



##### Table of Contents




    
    We incurred costs of $7.6 million in 2008 and $3.7 million in 2007 related to
unproductive downtime in our factories. As a result, we have taken actions to close or
consolidate several of our manufacturing and administrative facilities. Consequently, we
incurred expense of $16.5 million in 2008 and $9.2 million in 2007 associated with these
facility closures and consolidations, which related primarily to building, equipment, and
other asset write-downs and severance costs.
 
    
    We incurred charges to inventory of $24.2 million in 2008 related to product write-downs
to actual or anticipated sales values.
 
    
    We incurred charges of $10.0 million in 2008 associated with severance actions, which
related primarily to the companys announcement on December 11, 2008 that is was reducing
its workforce by approximately 15%.
 
    
    We incurred expense of $16.6 million in 2008 and $14.9 million in 2007 associated with
store closures, which related primarily to lease and fixed asset charges.
 
    
    We incurred charges of $10.5 million in 2008 and $11.8 million in 2007 related to bad
debt expense.
 
    
    We incurred charges of $202.0 million in 2008 related to the impairment of our goodwill
and trade name intangible assets.
 
    
    We recorded a valuation allowance on our deferred tax assets of $153.6 million in 2008,
of which $115.0 million was charged to income tax expense.
   56




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated Framework
        
  57




---



##### Table of Contents



Item 9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure
  
 Item 9A. Controls and Procedures
           
    
    Valuation allowances on deferred income tax assets
    
    Temporary differences related to foreign subsidiaries
   58




---



##### Table of Contents



Item 9B. Other Information
   59




---



##### Table of Contents



PART III
 
 Item 10 Directors, Executive Officers and Corporate Governance
   
 Item 11. Executive Compensation
  
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholders Matters
   60




---



##### Table of Contents



Equity Compensation Plan Information
  Number of securitiesWeighted-average
    
    
    remaining available forexercise price of
    
    
    future issuance underNumber of securities to
    
    
    outstanding
    
    
    equity compensation plansbe issued upon exercise
    
    
    options,
    
    
    (excluding securitiesof outstanding options,
    
    
    warrants and
    
    
    reflectedPlan Category
    
    warrants and rights
    
    
    rights
    
    
    in column (a))Equity compensation
plans approved by
security holders
    
    
    4,061,593
    (1)
    
    $
    20.54
    
    
    
    1,785,741
    (2)Equity compensation
plans not approved
by security
holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    4,061,593
    
    
    $
    20.54
    
    
    
    1,785,741
 (1)
    
    Consists of 3,610,092 shares of common stock underlying outstanding options granted under
our 1992 Stock Option Plan and our 1999 Long-Term Incentive Plan and 451,501 shares of
restricted stock awarded under our 1999 Long-Term Incentive Plan and 2008 Incentive Plan,
which vest over a period from 1 to 11 years. These shares of restricted stock are
disregarded for purposes of computing the weighted-average exercise price in column (b)
above.(2)
    
    Consists of shares available for grant under the 2008 Incentive Plan.    
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accountant Fees and Services
   61




---



##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
              Filed with
    
    Incorporated by ReferenceExhibit
    
    
    
    the Form
    
    
    
    Filing Date with
    
    ExhibitIndex No.
    
    Exhibit Description
    
    10-K
    
    Form
    
    the SEC
    
    No.3.1
    
    
    Restated Certificate of
Incorporation of the Company, as
amended
    
    
    
    10-Q
    
    May 14, 2002
    
    
    33.2
    
    
    By-Laws of the Company, as amended
effective as of August 7, 2008
    
    
    
    8-K
    
    August 13, 2008
    
    
    3.14.1
    
    
    Rights Agreement, dated as of
July 30, 1998, between the Company
and Bank of New York, as Rights
Agent
    
    
    
    10-Q
    
    August 14, 1998
    
    
    4.24.2
    
    
    First Amendment to Rights Agreement,
dated July 10, 2008, between the
Company and American Stock Transfer
and Trust Company, LLC, as Rights
Agent
    
    
    
    8-K
    
    July 11, 2008
    
    
    4.14.3
    
    
    Certificate of Designations,
Preferences and Rights of Series A
Junior Participating Preferred Stock
of the Company
    
    
    
    10-Q
    
    August 14, 1998
    
    
    4.310.1*
    
    
    Furniture Brands International, Inc.
1992 Stock Option Plan, as amended
    
    
    
    10-Q
    
    May 12, 1999
    
    
    10
    (a)10.2*
    
    
    Furniture Brands International, Inc.
1999 Long-Term Incentive Plan, as
amended
    
    
    
    S-8
    
    September 17, 2002
    
    
    4
    (f)10.3*
    
    
    Furniture Brands International, Inc.
2005 Long-Term Performance Bonus
Plan
    
    
    
    8-K
    
    May 3, 2005
    
    
    10
    (a)10.4*
    
    
    Form of Stock Option Grant Letter
    
    
    
    8-K
    
    February 2, 2005
    
    
    10
    (b)10.5*
    
    
    Form of Restricted Stock Grant Letter
    
    
    
    8-K
    
    February 11, 2005
    
    
    10
    (c)
  62




---



##### Table of Contents



Continued
 Filed with
    
    Incorporated by ReferenceExhibit
    
    
    
    the Form
    
    
    
    Filing Date with
    
    ExhibitIndex No.
    
    Exhibit Description
    
    10-K
    
    Form
    
    the SEC
    
    No.10.6*
    
    
    Furniture Brands International, Inc.
2008 Incentive Plan
    
    
    
    S-8
    
    December 19, 2008
    
    
    4.110.7*
    
    
    Form of Restricted Stock Unit
Agreement under the 2008 Incentive
Plan
    
    
    
    8-K
    
    December 22, 2008
    
    
    10.110.8*
    
    
    Form of Indemnification Agreement
between the Company and the
Companys directors
    
    
    
    10-K
    
    March 26, 2002
    
    
    10
    (c)10.9*
    
    
    Furniture Brands International, Inc.
Amended and Restated Restricted
Stock Plan for Outside Directors,
dated as of January 27, 2005
    
    
    
    8-K
    
    May 3, 2005
    
    
    10
    (b)10.10*
    
    
    Furniture Brands International, Inc.
Executive Incentive Plan, as amended
on October 25, 2001
    
    
    
    10-K
    
    March 26, 2002
    
    
    10
    (g)10.11*
    
    
    Form of Executive Incentive Plan
Grant Letter to Company Executives
    
    
    
    8-K
    
    February 2, 2005
    
    
    10
    (a)10.12*
    
    
    Employment Agreement, dated as of
February 10, 2004, between the
Company and John T. Foy
    
    
    
    10-K
    
    March 15, 2004
    
    
    10
    (o)10.13*
    
    
    Employment Agreement, dated as of
August 1, 1996, between the Company
and Lynn Chipperfield
    
    
    
    10-Q
    
    August 1, 1996
    
    
    10
    (c)10.14*
    
    
    Employment Agreement dated June 14,
2007 between the Company and Ralph
P. Scozzafava
    
    
    
    8-K
    
    June 18, 2007
    
    
    10.110.15*
    
    
    Form of Amendment to Executive
Employment Agreement between the
Company and Ralph P. Scozzafava,
effective as of June 18, 2007
    
    
    
    8-K
    
    May 7, 2008
    
    
    10.310.16*
    
    
    Form of Change of Control Agreement
    
    
    
    8-K
    
    June 26, 2007
    
    
    10.110.17*
    
    
    Furniture Brands International, Inc.
Executive Severance Plan
    
    
    
    8-K
    
    June 27, 2007
    
    
    10.110.18*
    
    
    Form of Amendment to the Furniture
Brands International, Inc. Executive
Severance Plan
    
    
    
    8-K
    
    May 7, 2008
    
    
    10.610.19*
    
    
    Furniture Brands Supplemental
Executive Retirement Plan, dated as
of January 1, 2002
    
    
    
    10-K
    
    March 25, 2003
    
    
    10
    (v)10.20*
    
    
    Form of Deferred Executive
Compensation Agreement between the
Company and John T. Foy
    
    
    
    8-K
    
    December 9, 2004
    
    
    10
    (a)10.21*
    
    
    Form of Cash Option Deferred
Executive Compensation Agreement
between the Company and John T. Foy
and Lynn Chipperfield
    
    
    
    8-K
    
    December 9, 2004
    
    
    10
    (b)10.22*
    
    
    Furniture Brands International, Inc.
Deferred Compensation Plan,
effective January 1, 2006
    
    
    
    S-8
    
    December 14, 2005
    
    
    10
    (b)10.23*
    
    
    Amendment to Furniture Brands
International, Inc. Deferred
Compensation Plan
    
    X10.24*
    
    
    Form of Long-Term Performance Cash
Bonus Letter
    
    
    
    8-K
    
    February 2, 2005
    
    
    10
    (c)10.25
    
    
    Credit Agreement, dated August 9,
2007, among the Company, Broyhill
Furniture Industries, Inc., HDM
Furniture Industries, Inc., Lane
Furniture Industries, Inc., and
Thomasville Furniture Industries,
Inc, the Loan Parties named therein,
the Lender Parties thereto, and
JPMorgan Chase Bank, N.A., as
Administrative Agent
    
    
    
    8-K
    
    August 10, 2007
    
    
    10.110.26
    
    
    First Amendment, dated March 17,
2008, to Credit Agreement, dated
August 9, 2007, among the Company,
Broyhill Furniture Industries, Inc.,
HDM Furniture Industries, Inc., Lane
Furniture Industries, Inc., and
Thomasville Furniture Industries,
Inc, the Loan Parties named therein,
the Lender Parties thereto, and
JPMorgan Chase Bank, N.A., as
Administrative Agent
    
    
    
    10-Q
    
    May 12, 2008
    
    
    10.2
  63




---



##### Table of Contents



Continued
 Filed with
    
    Incorporated by ReferenceExhibit
    
    
    
    the Form
    
    
    
    Filing Date with
    
    ExhibitIndex No.
    
    Exhibit Description
    
    10-K
    
    Form
    
    the SEC
    
    No.10.27
    
    
    Amendment No. 2 to Credit Agreement
and Waiver, dated February 20, 2009,
among the Company, Broyhill
Furniture Industries, Inc., HDM
Furniture Industries, Inc., Lane
Furniture Industries, Inc., and
Thomasville Furniture Industries,
Inc, the Loan Parties named therein,
the Lender Parties thereto, and
JPMorgan Chase Bank, N.A., as
Administrative Agent
    
    X21.1
    
    
    List of Subsidiaries of the Company
    
    X23.1
    
    
    Consent of Independent Registered
Public Accounting Firm
    
    X31.1
    
    
    Certification of Ralph P.
Scozzafava, Chairman of the Board
and Chief Executive Officer of the
Company, Pursuant to
Rule 13a-14(a)/15d-14(a), as Adopted
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    X31.2
    
    
    Certification of Steven G. Rolls,
Chief Financial Officer (Principal
Financial Officer) of the Company,
Pursuant to
Rule 13a-14(a)/15d-14(a), as Adopted
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    X32.1
    
    
    Certification of Ralph P.
Scozzafava, Chairman of the Board
and Chief Executive Officer of the
Company, Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002
    
    X32.2
    
    
    Certification of Steven G. Rolls,
Chief Financial Officer (Principal
Financial Officer) of the Company,
Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
    
    X
 *
    
    Indicates management contact or compensatory plan, contract or arrangement.  64




---



##### Table of Contents



Schedule II
 
 (Dollars in Thousands)AdditionsBalance at
    
    
    Charged to
    
    
    Deductions
    
    
    Balance atBeginning
    
    
    Costs and
    
    
    From
    
    
    End ofDescription
    
    of Period
    
    
    Expenses
    
    
    Reserves
    
    
    PeriodYear Ended December 31, 2008Allowances deducted from
receivables on balance sheet:Allowance for doubtful accounts
    
    $
    36,645
    
    
    $
    40,819
    
    
    $
    (50,390
    )
    
    $
    27,074Allowance for cash discounts/
chargebacks/other
    
    
    8,822
    
    
    
    19,235
    
    
    
    (20,759
    )
    
    
    7,298$
    45,467
    
    
    $
    60,054
    
    
    $
    (71,149
    )
    
    $
    34,372Year Ended December 31, 2007Allowances deducted from
receivables on balance sheet:Allowance for doubtful accounts
    
    $
    21,595
    
    
    $
    24,994
    
    
    $
    (9,944
    )
    
    $
    36,645Allowance for cash discounts/
chargebacks/other
    
    
    7,430
    
    
    
    26,715
    
    
    
    (25,323
    )
    
    
    8,822$
    29,025
    
    
    $
    51,709
    
    
    $
    35,267
    
    
    $
    45,467Year Ended December 31, 2006Allowances deducted from
receivables on balance sheet:Allowance for doubtful accounts
    
    $
    16,053
    
    
    $
    13,410
    
    
    $
    (7,869
    )
    
    $
    21,595Allowance for cash discounts/
chargebacks/other
    
    
    7,315
    
    
    
    30,052
    
    
    
    (29,937
    )
    
    
    7,430$
    23,368
    
    
    $
    43,462
    
    
    $
    (37,806
    )
    
    $
    29,025
   65




---



##### Table of Contents



SIGNATURES
  Furniture Brands International, Inc.By:
    /s/ Ralph P. ScozzafavaRalph P. ScozzafavaDate: March 2, 2009
    
    Chairman of the Board and Chief Executive Officer  Signature
    
    Title
    
    Date/s/ Ralph P. Scozzafava
    
    Chairman of the Board, Chief
Executive
    
    March 2, 2009Ralph P. Scozzafava
    
    Officer and Director

(Principal Executive Officer)/s/ Steven G. Rolls
    
    Chief Financial Officer
    
    March 2, 2009Steven G. Rolls
    
    (Principal Financial Officer)/s/ Richard R. Isaak
    
    Controller
    
    March 2, 2009Richard R. Isaak
    
    (Principal Accounting Officer)/s/ Wilbert G. Holliman, Jr.
    
    Director
    
    March 2, 2009Wilbert G. Holliman, Jr./s/
John R. Jordan, Jr.
    
    Director
    
    March 2, 2009John R. Jordan, Jr./s/ Ira D. Kaplan
    
    Director
    
    March 2, 2009Ira D. Kaplan/s/ Bobby L. Martin
    
    Director
    
    March 2, 2009Bobby L. Martin/s/ Maureen A. McGuire
    
    Director
    
    March 2, 2009Maureen A. McGuire/s/ Aubrey B. Patterson
    
    Director
    
    March 2, 2009Aubrey B. Patterson/s/ Alan G. Schwartz
    
    Director
    
    March 2, 2009Alan G. Schwartz
  66




---



##### Table of Contents



EXHIBIT INDEX
 Filed with
    
    Incorporated by ReferenceExhibit
    
    
    
    the Form
    
    
    
    Filing Date with
    
    ExhibitIndex No.
    
    Exhibit Description
    
    10-K
    
    Form
    
    the SEC
    
    No.3.1
    
    
    Restated Certificate of
Incorporation of the Company, as
amended
    
    
    
    10-Q
    
    May 14, 2002
    
    
    33.2
    
    
    By-Laws of the Company, as amended
effective as of August 7, 2008
    
    
    
    8-K
    
    August 13, 2008
    
    
    3.14.1
    
    
    Rights Agreement, dated as of
July 30, 1998, between the Company
and Bank of New York, as Rights
Agent
    
    
    
    10-Q
    
    August 14, 1998
    
    
    4.24.2
    
    
    First Amendment to Rights Agreement,
dated July 10, 2008, between the
Company and American Stock Transfer
and Trust Company, LLC, as Rights
Agent
    
    
    
    8-K
    
    July 11, 2008
    
    
    4.14.3
    
    
    Certificate of Designations,
Preferences and Rights of Series A
Junior Participating Preferred Stock
of the Company
    
    
    
    10-Q
    
    August 14, 1998
    
    
    4.310.1*
    
    
    Furniture Brands International, Inc.
1992 Stock Option Plan, as amended
    
    
    
    10-Q
    
    May 12, 1999
    
    
    10
    (a)10.2*
    
    
    Furniture Brands International, Inc.
1999 Long-Term Incentive Plan, as
amended
    
    
    
    S-8
    
    September 17, 2002
    
    
    4
    (f)10.3*
    
    
    Furniture Brands International, Inc.
2005 Long-Term Performance Bonus
Plan
    
    
    
    8-K
    
    May 3, 2005
    
    
    10
    (a)10.4*
    
    
    Form of Stock Option Grant Letter
    
    
    
    8-K
    
    February 2, 2005
    
    
    10
    (b)10.5*
    
    
    Form of Restricted Stock Grant Letter
    
    
    
    8-K
    
    February 11, 2005
    
    
    10
    (c)10.6*
    
    
    Furniture Brands International, Inc.
2008 Incentive Plan
    
    
    
    S-8
    
    December 19, 2008
    
    
    4.110.7*
    
    
    Form of Restricted Stock Unit
Agreement under the 2008 Incentive
Plan
    
    
    
    8-K
    
    December 22, 2008
    
    
    10.110.8*
    
    
    Form of Indemnification Agreement
between the Company and the
Companys directors
    
    
    
    10-K
    
    March 26, 2002
    
    
    10
    (c)10.9*
    
    
    Furniture Brands International, Inc.
Amended and Restated Restricted
Stock Plan for Outside Directors,
dated as of January 27, 2005
    
    
    
    8-K
    
    May 3, 2005
    
    
    10
    (b)10.10*
    
    
    Furniture Brands International, Inc.
Executive Incentive Plan, as amended
on October 25, 2001
    
    
    
    10-K
    
    March 26, 2002
    
    
    10
    (g)10.11*
    
    
    Form of Executive Incentive Plan
Grant Letter to Company Executives
    
    
    
    8-K
    
    February 2, 2005
    
    
    10
    (a)10.12*
    
    
    Employment Agreement, dated as of
February 10, 2004, between the
Company and John T. Foy
    
    
    
    10-K
    
    March 15, 2004
    
    
    10
    (o)10.13*
    
    
    Employment Agreement, dated as of
August 1, 1996, between the Company
and Lynn Chipperfield
    
    
    
    10-Q
    
    August 1, 1996
    
    
    10
    (c)10.14*
    
    
    Employment Agreement dated June 14,
2007 between the Company and Ralph
P. Scozzafava
    
    
    
    8-K
    
    June 18, 2007
    
    
    10.110.15*
    
    
    Form of Amendment to Executive
Employment Agreement between the
Company and Ralph P. Scozzafava,
effective as of June 18, 2007
    
    
    
    8-K
    
    May 7, 2008
    
    
    10.310.16*
    
    
    Form of Change of Control Agreement
    
    
    
    8-K
    
    June 26, 2007
    
    
    10.110.17*
    
    
    Furniture Brands International, Inc.
Executive Severance Plan
    
    
    
    8-K
    
    June 27, 2007
    
    
    10.110.18*
    
    
    Form of Amendment to the Furniture
Brands International, Inc. Executive
Severance Plan
    
    
    
    8-K
    
    May 7, 2008
    
    
    10.610.19*
    
    
    Furniture Brands Supplemental
Executive Retirement Plan, dated as
of January 1, 2002
    
    
    
    10-K
    
    March 25, 2003
    
    
    10
    (v)10.20*
    
    
    Form of Deferred Executive
Compensation Agreement between the
Company and John T. Foy
    
    
    
    8-K
    
    December 9, 2004
    
    
    10
    (a)10.21*
    
    
    Form of Cash Option Deferred
Executive Compensation Agreement
between the Company and John T. Foy
and Lynn Chipperfield
    
    
    
    8-K
    
    December 9, 2004
    
    
    10
    (b)10.22*
    
    
    Furniture Brands International, Inc.
Deferred Compensation Plan,
effective January 1, 2006
    
    
    
    S-8
    
    December 14, 2005
    
    
    10
    (b)10.23*
    
    
    Amendment to Furniture Brands
International, Inc. Deferred
Compensation Plan
    
    X10.24*
    
    
    Form of Long-Term Performance Cash
Bonus Letter
    
    
    
    8-K
    
    February 2, 2005
    
    
    10
    (c)
  67




---



##### Table of Contents



Filed with
    
    Incorporated by ReferenceExhibit
    
    
    
    the Form
    
    
    
    Filing Date with
    
    ExhibitIndex No.
    
    Exhibit Description
    
    10-K
    
    Form
    
    the SEC
    
    No.10.25
    
    
    Credit Agreement, dated August 9,
2007, among the Company, Broyhill
Furniture Industries, Inc., HDM
Furniture Industries, Inc., Lane
Furniture Industries, Inc., and
Thomasville Furniture Industries,
Inc, the Loan Parties named therein,
the Lender Parties thereto, and
JPMorgan Chase Bank, N.A., as
Administrative Agent
    
    
    
    8-K
    
    August 10, 2007
    
    
    10.110.26
    
    
    First Amendment, dated March 17,
2008, to Credit Agreement, dated
August 9, 2007, among the Company,
Broyhill Furniture Industries, Inc.,
HDM Furniture Industries, Inc., Lane
Furniture Industries, Inc., and
Thomasville Furniture Industries,
Inc, the Loan Parties named therein,
the Lender Parties thereto, and
JPMorgan Chase Bank, N.A., as
Administrative Agent
    
    
    
    10-Q
    
    May 12, 2008
    
    
    10.210.27
    
    
    Amendment No. 2 to Credit Agreement
and Waiver, dated February 20, 2009,
among the Company, Broyhill
Furniture Industries, Inc., HDM
Furniture Industries, Inc., Lane
Furniture Industries, Inc., and
Thomasville Furniture Industries,
Inc, the Loan Parties named therein,
the Lender Parties thereto, and
JPMorgan Chase Bank, N.A., as
Administrative Agent
    
    X21.1
    
    
    List of Subsidiaries of the Company
    
    X23.1
    
    
    Consent of Independent Registered
Public Accounting Firm
    
    X31.1
    
    
    Certification of Ralph P.
Scozzafava, Chairman of the Board
and Chief Executive Officer of the
Company, Pursuant to
Rule 13a-14(a)/15d-14(a), as Adopted
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    X31.2
    
    
    Certification of Steven G. Rolls,
Chief Financial Officer (Principal
Financial Officer) of the Company,
Pursuant to
Rule 13a-14(a)/15d-14(a), as Adopted
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    X32.1
    
    
    Certification of Ralph P.
Scozzafava, Chairman of the Board
and Chief Executive Officer of the
Company, Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002
    
    X32.2
    
    
    Certification of Steven G. Rolls,
Chief Financial Officer (Principal
Financial Officer) of the Company,
Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
    
    X
 *
    
    Indicates management contact or compensatory plan, contract or arrangement.  68